Nearly 50% of Canadian businesses looking to pursue M&A within next 12 months
TORONTO, Nov. 21, 2016 /CNW/ - Despite nervousness with the global economy, Canadian companies are optimistic about the business environment in Canada. According to EY's latest Canadian Capital Confidence Barometer, 48% of businesses are actively pursuing deals this year. This optimism in Canada is also shared by the global community with Canada becoming one of the top 5 global investment destinations for the first time in over 3 years.
"This marks two consecutive years that Canada's results are exceeding historical deal-making averages," says Doug Jenkinson, a partner in EY's Transaction Advisory Services practice. "This is encouraging for our economy—both in terms of growth and the way the world views Canadian businesses. That optimism is trickling down into confidence in our local economy. We're also seeing more people who believe our economy will continue to improve over the next year."
Canada in the global spotlight
EY's latest Canadian Capital Confidence Barometer shows that Canada is moving up the world ranks when it comes to investment destinations of choice. For the first time since 2013, Canada sits among the Top 5 countries where global respondents plan to actively pursue acquisitions.
"In the oil and gas sector, Canada ranks in second place—globally—to do a deal," says Jenkinson. "Geopolitical uncertainty and macroeconomic issues, including Brexit, are adding complexity to cross-border investments. In fact, the UK has dropped from the Top 5 list for the first time in the Barometer's seven year history.
The top five investment destinations of choice are:
- United States
Jenkinson adds: "When we zoom in even closer, Canada is an even more attractive target. US respondents say that Canada is their top foreign destination. Some of that is our proximity, and some of it is due to the fact that the dollar is so favorable that it feels as though you're getting a good deal."
EY's survey finds that Canadian respondents have some of the busiest pipelines in the world, and they're impressed with the quality of deals in the market. More than half of the Canadian respondents (52%) say they'll close more than one deal this year, and another 20% say they'll close more than five. This indicates that Canadian businesses are confident in what they're offering, and they're looking to deals that will transform companies.
But that doesn't mean respondents are willing to do a deal at any cost.
"Eighty-five percent of our survey respondents say they've walked away from an acquisition in the past year," says Jenkinson. "Companies are looking for deals, that's for sure. But things like wide valuation gaps and other critical issues uncovered during due diligence can be common – and good – reasons for walking away from a deal."
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About EY's Global Capital Confidence Barometer
The EY Global Capital Confidence Barometer is a biannual survey of executives from large companies around the world and across industry sectors. This is the 15th semi-annual Barometer in the series, which began in November 2009; respondents for the 15th edition were surveyed in August and September. The objective of the Barometer is to gauge corporate confidence in the global and domestic economic outlook, to understand boardroom priorities in the next 12 months, and to identify emerging capital practices that will distinguish those companies building competitive advantage as the global economy continues to evolve.
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.
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